Debunking peak oil hype with facts and figures, and exposing the agendas behind peak oil.
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Monday, February 20, 2006

245. WHERE IS THE UNDISCOVERED OIL?

To shed more light on why peak oiler criticisms of the USGS are faulty, let's look at the details of where the USGS says undiscovered oil exists. The following data comes from Table AR-9 "Discovered and undiscovered petroleum volumes in assessed portions of countries" in the Analysis of Assessment Results section of the USGS study. The value given for each country is mean undiscovered oil in MMBO (million barrels of oil):

Now, the peak oilers keep saying that we're not discovering the amounts of oil which the USGS estimated, but the huge fallacy in their reasoning is this: THE LACK OF DISCOVERY IN REGION X MEANS ABSOLUTELY NOTHING IF LITTLE EFFORT IS BEING MADE TO DISCOVER OIL IN REGION X. If indeed the USGS mean estimates are outrageously high, it should be easy for anyone with access to country-by-country discovery figures (like Campbell, or Rembrandt(?)) to identify at least one country meeting the following two conditions:

1) Discovery in the country during 1996-2003 was substantially less than 27% of the USGS mean estimate for that country.2) Actual efforts were being made to discover oil in that country in the period 1996-2003 (i.e. significant exploratory drilling was actually taking place).

The following are two graphs from a recent presentation by Mike Lynch (click to enlarge). They nicely illustrate the factor which peak oilers are so keen to ignore. Discovery is a function of two factors: 1) the amount of undiscovered oil in the ground, 2) EXPLORATORY EFFORT. Notice the extremely low level of exploratory effort in the Middle East and FSU.

18 Comments:

"THE LACK OF DISCOVERY IN REGION X MEANS ABSOLUTELY NOTHING IF LITTLE EFFORT IS BEING MADE TO DISCOVER OIL IN REGION X"

Unless the lack of effort is due to the oil companies working on the ground knowing there isn't any oil to find due to their own seismic and geophysical studies. Your statement suggests that the amount of oil discovered is proportional to the amount of effort invested in looking - well you can't find something if it isn't there!

I haven’t spent much time digging in my back garden looking for gold coins, so you could say the reason I haven’t found any gold coins is that I haven’t made enough effort. That’s no evidence to say I’d find some if only I got the spade out though.

Chris, if you approach the question from that direction, you're just assuming it out of existence. For example, your argument does not prove that there is no new oil to be found in Iraq. It just assumes that there isn't any.

If you want your argument to apply to locations like Iraq, you need to show that the oil companies have actually done seismic and geophysical studies in Iraq, and on that basis, concluded there is no new oil there. I think we can agree that that is not the situation in Iraq. Or Saudi Arabia, or Mexico or any number of other places where oil is nationalized. The oil companies can't/won't spend money exploring in countries where they are barred from investment.

It's really pointless to discuss this issue in the abstract. It will only be settled by looking at the actual facts on individual countries.

Here's a classic example of what I'm talking about: "From 1995 to 2004, fewer than 30 new wildcat [exploration] wells were drilled in Saudi Arabia, compared with more than 15,700 in the United States."LINK

How do you explain that, Chris? The "oil companies" looked at their detailed seismic and geophysical studies of the U.S. and Saudi Arabia, and came to the conclusion that the U.S., 25-35 years after its peak, was where all the big untapped oil was located??

At a rate of 85 MMB/day consumption, though, it seems that the untapped reserves of some of those countries won't last the world even 1 day...and the most optimistic outlook on there (Saudi) will last only about 3 years.

I think what's left to discover is a lot of relatively small fields which are worth the effort only if the oil prices stay relatively high for a while. If you look at the top assessment unit in term of field size (20300101) situated along the North East coast of Saudi Arabia:

20300101 (Cretaceous Reservoirs):% of field > 1Gb: 9.79Number of field > 1Gb: 15.31

1) If it is possible to determine from seismic and geophysical studies that an area has no oil, why is it that we drill so many dry holes, even now? Shouldn't we know for a fact, from the above-surface data, that there isn't any oil down there?

2) If the relative lack of oil exploration in the middle east/caspian is due to above-ground studies by oil companies showing lack of oil, how do you square that with all the peak oiler rhetoric about "resource war"? It hardly makes sense to wage war to control oil in the middle east and caspian if studies show that there is no oil there. You can't have it both ways -- i.e. there's lots of oil there when you want to make the case for resource war, but hardly any oil there when you want to explain the lack of exploration.

regarding (2) you are playing a logic game here. The study does not show there is no oil there, the study show there is no more undiscovered oil. It's two different concept. Ever if there is no un-discovered oil, there is still quite a bit of discovered and producing oil there so a resource war could be fight for them.

Plenty of seismic and other studies have surveyed the whole earth pretty good so we have a very good idea where are the likely places where oil can be find, and where are not. I do not think repeating those existing studies is very meanful. The only meaningful exploration remaining to be done is more explorations in the few areas that have been identified as possible oil producing regions. I do not suppose randomly drill holes at any randomly picked location is going to help.

The study does not show there is no oil there, the study show there is no more undiscovered oil.

Who exactly did this study of Iraq? The USGS, an organization of geologists, did a study of Iraq, and came to the conclusion that there is a large amount of undiscovered oil there. In fact, they came to the conclusion that there is a 95% chance that there is large amount of undiscovered oil there. So, I repeat, where is this study you're referring to, and who did it?

How do you suppose they discovered all the existing oil fields? Do they just randomly drill a hole on the ground and chanced onto an oil fields? NO.

To discover oil, you first have to study the geology of the WHOLE wide area, and identify areas where oil might exist. And then you concentrate on all the areas that are hopeful and do some seismic study. And then from all the seismic data you identify all the shadows which could be oil. And then drill down. And if you hit oil, Bingo you have discovered an oil field. So by the time you drill some exploration wells, you have done quite a ton of seismic exploration already.

The matter of fact is all the existing oil field we discovered all over the world means we have done plenty of seismic explorations in most of the areas we can think of. What remains to be done is more thorough and more detailed study, often times in areas that have been studied already in the past.

How big can countries like Iran and Iraq be? Seismic study is really very cheap comparing with actually drill a hole. You discarge some dynamite at one location and collect signals from several detectors placed several kilometer away, and then use computers to process the data. So one survey would cover an area tens or even hundreds of square kilometers. You don't need too many to cover the whole area of whole countries.

But there are many areas that have not been explored, on the continental shelf and continental margin, of the world.

True, it's not cheap to "lift" the oil, it averages around $70 a barrel, but expensive is different from not being there at all.

Also, the depth of exploration is increasing substantially. The subsalt depth was not explored at all -- it was labelled on old seimic maps as "the salt abyss," now we know there are large oil deposits, via Brazil.

This is true all over the world, but more acutely in the continental margin.

So you ask me where the undiscovered oil is, and I will point to the subsalt depths.

And finally, why the delay? Because, until recently, it was almost impossible to get resolution below the salt, as salt absorbs and distorts energy waves.

So, Peak oil pushers are talking old news, when they say "all the world has already been explored" -- it hasn't.

you've done nothing to debunk peak oil. instead, you've taken a common tack - argue that there's a bunch of oil discovered and undiscovered in the ground. and you are correct. the amount in the ground, however, is neither her nor there. the metric that matters is how fast it can be produced. so, we must talk about production rates at a field level and aggregate up. when you do this, you see that most producing countries are in decline, and only a handful will not be in decline over the next 5 to 10 years. this is actually quite an easy concept to understand once you have a basic knowledge of reservoir dynamics - as reservoirs become depleted, pressure drops and repressurization techniques are energy intensive. more importantly, there is a maximum efficiency rate of production which is determined primarily by porosity and the composition of the crude (is it heavy or light?). in other words, while the rate of production is subject to many above ground factors (i.e. political and economic factors), there is an absolute geologically imposed limit. furthermore, the faster you suck the crude from the ground, the shorter the production lifetime and the steeper the production decline.

now, let's look back at the idea that there is lots more to be discovered. aggregating up from our best knowledge at a field level, we know that production of conventional oil is at a peak now. therefore new discoveries, which will take roughly 10 years to bring online must bring more conventional oil online faster than declining rates.

if you take a look at the EIA report - which is quite amusing from a petroleum geologist perspective - you see that OPEC production is predicted to increase by 50% by 2030. in barrels, this would be about 14 million barrels per day. now let's just suppose that Ghawar will continue to produce at 4.5 million barrels per day... for those that don't know, Ghawar is the most productive field by a factor of about 3. heck, let's suppose that none of the fields in OPEC nations have peaked or will peak before 2030 (ummm... this is HIGHLY unlikely, but for the sake of argument...). this would mean that in order to get produce another 14 million barrels per day, OPEC nations would have to find roughly 10 more fields which are as large as the second highest producing field (which in 2000 was the Burgan field in Kuwait).

now, to anyone who has found this blog, and has read all the way through this comment, I ask, DOES ANYONE THINK THIS SCENARIO REFLECTS BELOW GROUND REALITIES???